China’s family planning policies and their labor market consequences

Abstract

China initiated its family planning policy in 1962 and its one-child policy in 1980, and it allowed all couples to have two children as of 1 January 2016. This paper systematically examines the labor market consequences of China’s family planning policies. First, we briefly review the historical evolution of China’s family planning policies and the existing literature. Second, we investigate the effects of these policies on the labor market, focusing on the size and quality of the working-age population and its age and gender composition. We give special attention to regional differences in the demographic structure resulting from the interaction of the family planning policies and internal migration. Finally, we discuss ongoing and prospective policy changes and their potential consequences. Although urban areas and coastal provinces have implemented stricter family planning policies, our analysis shows that because of internal migration, the aging problem is more severe in rural areas and in inland provinces. Our simulation results further indicate that the new two-child policy might fall short of pulling China out of its aging situation.

Keywords

Family planning policy One-child policy Aging Migration

Responsible editor: Klaus F. Zimmermann

JEL Classification

Notes

Acknowledgement

We would like to thank the editor, Klaus Zimmermann, for his guidance and thank three anonymous referees and participants at a seminar at Peking University and Workshop on: Innovation, Trade and Wages in the East Asia Time Zone hosted by Kobe University for their constructive comments. All views and the remaining errors are the authors’ alone.

Compliance with ethical standards

Funding

Liqiu Zhao acknowledges financial support from the Natural Science Foundation of China (grant no. 71403286) and the Center for Labor Economics and Public Policy at Zhejiang University. Zhong Zhao acknowledges financial support from the Special Fund for Building World-Class Universities and Disciplines through the Renmin University of China (grant no. 16XNL005).

Conflict of interest

The authors declare that they have no conflict of interest.

Appendix 1: Data sources and variable definitions

1. Data sources:

The 1 % sample of the 1982 Population Census data of China (observations 10,037,508) was conducted by China’s National Bureau of Statistics on 1 July 1982.

The 1 % sample of the 1990 Population Census data of China (observations 11,475,065) was conducted by China’s National Bureau of Statistics on 1 July 1990.

The 0.1 % sample of the 2000 Population Census data of China (observations: 1,180,111) was conducted by China’s National Bureau of Statistics on 1 November 2000.

The 20 % sample of the 2005 1 % National Population Sample Survey of China (Mini-Census, observations: 2,585,481), part of the China census program, is an inter-census survey administered by the National Bureau of Statistics in China on 1 November 2005.

Tabulation on the 2010 Population Census of the People’s Republic of China, compiling the results of the 2010 Population Census conducted by China’s National Bureau of Statistics on 1 November 2010.

China city statistical yearbook 1991 is an annual statistical publication that comprehensively reflects the development of the economy and society of China’s cities. The following variables used for analysis are from the yearbook: log GNI in 1990, log fixed capital investment in 1990, the number of college students per 10,000 people in 1990, and the number of medical doctors per 10,000 people in 1990.

2. Definition of Variables:

Birth rates in 1981–1985 are defined as the number of new births in the corresponding years per 1000 people.

Log population in 1990 is the log number of observations at the prefecture city level.

Average education in 1990 refers to the average years of schooling at the prefecture city level.

Percentage of employment in manufacturing in 1990 is the ratio of the number of workers employed in the manufacturing industry to the total employment at the prefecture city level.

Unemployment rate in 1990 is defined as the ratio of the number of non-working persons seeking jobs to total labor force for urban hukou population at the prefecture city level.

Proportion of Han Chinese in 1990 is the share of Han Chinese in the total population at the prefecture city level.

A migrant is defined as a person whose place of hukou registration is different from his or her place of living.

Migration flow is the number of migrants between pairs of prefecture cities.

In-migration rate in 2005 is the ratio of the number of migrants who move into a prefecture city to the total hukou population of the prefecture city.

Out-migration rate in 2005 is the ratio of the number of migrants who move out of their registered prefecture city to the total hukou population of the prefecture city.

Percent of population aged 65+ refers to the percentage of the population aged 65 and above at the prefecture city level.

Sex ratio in Table 4 is the sex ratio in a prefecture region, that is, the ratio of sampled males to females who had rural hukou in the prefecture region and who were born before November 2004.

Self-reported good health equals one if respondents report that they are healthy or equals zero if respondents report that they have some or many health issues in their work and daily lives.

Appendix 2: Supplementary figures and tables

Initial years of being allowed to have a second birth, by province and specific population group

Province

Ethnic minorities

First birth was daughter

Both partners are only children

One partner is only child

Rural

Urban

Rural

Rural

Urban

Rural

Urban

Anhui

1981

1981

1988

1984

1984

1988

2014

Beijing

1983

1983

1991

1983

1991

2014

2014

Chongqing

1987

1987

1987

1987

1987

2014

2014

Fujian

1988

N.A.

1988

1988

1988

1988

2014

Guizhou

1988

1988

1998

1988

1988

2014

2014

Guangdong

1986

N.A.

1986

1986

1986

2014

2014

Guangxi

1994

1994

1994

1994

1994

2014

2014

Gansu

1985

1985

1990

2002

2002

2014

2014

Hainan

1989

1989

1989

1989

1989

2014

2014

Henan

1990

N.A.

1990

2011

2011

2014

2014

Hubei

2009

N.A.

1988

2009

2009

2014

2014

Hunan

1990

N.A.

1990

1990

1990

2014

2014

Hebei

1982

1989

1989

1982

1989

2014

2014

Heilongjiang

1990

1990

1990

1990

1990

2014

2014

Inner Mongolia

1990

1990

1990

2002

2002

2014

2014

Jiangsu

N.A.

N.A.

1990

1990

1990

1990

2014

Jiangxi

1990

1990

1990

1990

1990

2014

2014

Jilin

1988

1988

1988

1988

1988

2002

2014

Liaoning

1988

N.A.

1988

1988

1988

1988

2014

Ningxia

1982

1986

1982

1982

1986

1982

2014

Qinghai

1982

1992

1982

1982

1992

1982

2014

Sichuan

1987

1987

1987

1987

1987

2014

2014

Shanxi

1990

1990

1990

1990

1990

1990

2014

Shandong

1988

1988

1988

1988

1988

2014

2014

Shanghai

1992

1992

N.A.

1990

1990

1990

2014

Shaanxi

1981

1981

1991

1986

1986

2014

2014

Tianjin

1988

1988

1988

1988

1988

1988

2014

Tibet

1992

1992

N.A.

1992

1992

2014

2014

Xinjiang

2002

2002

2002

2002

2002

2002

2013

Yunnan

1991

2015

1991

1991

1991

2015

2015

Zhejiang

1990

1990

2002

1989

1989

2014

2014

Authors’ own construction based on various local legal and administrative documents

N.A. Relevant policies were not available in local documents

Table 6

Demographic and economic characteristics of prefecture cities

Variables

(1)

(2)

(3)

(4)

(5)

Observations

Mean

Std. Err.

Min

Max

Proportion of Han Chinese

347

0.851

0.263

0

1

Percent of employment in manufacturing in 1990

347

7.212

7.515

0

46.10

Average education in 1990

347

6.557

1.375

1.743

10.78

New births per 1000 people in 1985

347

18.14

4.877

8.112

33.61

Fine in years of income in 1984

347

0.980

0.321

0.288

1.229

College std per 10,000 people in 1990

232

54.82

53.06

0

354.9

Medical doctors per 10,000 people in 1990

232

37.91

16.80

4

111

Unemployment rate in 1990

347

0.0475

0.0363

0

0.250

Log GNI per capita in 1990

231

7.680

0.554

6.370

9.821

Log pop in 1990

232

13.32

0.672

11.79

15.32

Log fixed capital investment in 1990

232

10.44

1.140

7.469

13.19

The table lists variables used for analyses in Tables 2 and 3. GNI in 1990, fixed capital investment in 1990, the number of college students per 10, 000 people in 1990, and the number of medical doctors per 10, 000 people in 1990 are from the 1991 China city statistical yearbook. Fine in years of income in 1984 is from Ebenstein (2010). The rest variables are calculated based on the 1 % sample of the 1990 population census data

The 20 % sample of the 2005 mini-census. The sample used for description and analysis is further restricted to the currently married Han women aged from 15 to 50, having rural hukou, and having one daughter before November 2004. The sex ratio in a prefecture region is the ratio of sampled males to females who had rural hukou in the prefecture region and were born before November 2004

Table 8

China’s mortality rates by gender and age group, deaths per 1000 people

Age group

1973–1975

1981

1990

2000

2010

Male

Female

Male

Female

Male

Female

Male

Female

Male

Female

0

50.15

43.73

36.47

34.54

28.95

33.77

22.56

32.10

3.73

3.92

1–4

9.02

9.23

4.03

4.49

2.36

2.52

1.48

1.49

0.69

0.59

5–9

2.31

2.11

1.31

1.08

0.79

0.59

0.65

0.44

0.36

0.23

10–14

1.01

0.85

0.79

0.66

0.59

0.45

0.50

0.33

0.37

0.22

15–19

1.10

0.96

1.09

0.93

1.03

0.87

0.77

0.47

0.52

0.25

20–24

1.48

1.46

1.42

1.34

1.40

1.21

1.21

0.72

0.70

0.30

25–29

1.58

1.71

1.46

1.48

1.40

1.17

1.36

0.84

0.84

0.37

30–34

2.00

2.09

1.77

1.69

1.79

1.35

1.66

0.98

1.11

0.50

35–39

2.86

2.80

2.46

2.17

2.28

1.65

2.15

1.18

1.59

0.71

40–44

4.11

3.74

3.52

2.91

3.29

2.31

3.05

1.70

2.37

1.11

45–49

6.22

5.12

5.38

4.24

5.13

3.64

4.33

2.57

3.50

1.68

50–54

8.85

7.76

8.81

6.64

8.33

5.81

6.71

4.19

5.48

2.81

55–59

15.39

11.53

14.49

10.27

13.72

9.13

10.57

6.63

8.04

4.29

60–64

25.32

19.16

24.74

17.29

23.36

15.49

17.92

11.43

13.02

7.49

65–69

37.63

28.86

38.89

27.24

37.85

25.37

29.59

19.06

21.26

13.06

70–74

63.57

50.22

64.34

46.32

63.66

44.00

51.03

34.11

37.02

24.36

75–79

83.03

69.83

97.17

71.63

97.59

70.06

79.89

55.70

59.13

40.89

80+

156.34

145.71

175.58

147.17

176.28

140.02

153.87

122.92

119.26

98.28

Mortality rates in 1973–1975, 1981, and 1990 are from Tu, Z. and R. Wang, 1996, Analysis of China’s death rates by age and gender, Chinese Journal of Population Science, (in Chinese), 96(2):51-55. Mortality rates in 2000/2010 are from the Tabulation on the 2000/2010 Population Census of the People’s Republic of China, available at http://www.stats.gov.cn/english/. The mortality rates in this table are used in the simulations in this paper

Appendix 3: Procedures of simulations

1. Mortality rates used for simulations

Table 8 shows China’s mortality rates by gender and age group in 1973–1975, 1981, 1990, 2000, and 2010. The 1973–1975 rates are the average rates of the 3 years.

Mortality rates of a year of age are assumed to be identical to the rates of the age group which the year of age is in. We assume the mortality rates in 1970–1972 are the same with the average mortality rates in 1973–1975. We interpolate the mortality rates in 1976–1980 by assuming the rates change linearly from 1975 to 1981. Similarly, we interpolate the mortality rates in 1982–1989, 1991–1999, and 2001–2009, assuming that rates change linearly over years. The mortality rates after 2010 are assumed to be identical to the 2010 rates.

Extrapolate backward the population size of 1970 by gender and age (0–99 years) according to the gender-age population structure in the 1 % sample of the 1982 Population Census data, assuming that mortality rates from 1970 to 1982 are those described in Table 8.

Step 2:

Calculate the lifetime number of births for each birth cohort of women, beginning with the cohort of 1918, based on actual birth records from the samples of the 1982, 1990, and 2000 Population Census and the 2005 Mini-Census. Starting from the cohort of 1971, the lifetime number of births is assumed to decrease by 0.1 for every 10 years of cohorts (e.g., 1.6 for birth cohorts 1971–1980, 1.5 for birth cohorts of 1981–1990, etc.).

Step 3:

Had there been no family planning policies in history, the lifetime number of births for each cohort of women is assumed to increase by 1, and the sex ratio at birth is assumed to be 106 boys to 100 girls. The lifetime number of births of a woman is distributed to each year of age of the woman based on the probability of childbearing by age of women described in Wang (2015). The probability of childbearing by age is derived from detailed birth records of the China Health and Nutrition Survey, and is created separately for four cohort groups: cohorts of 1950 and older, 1951–1960, 1961–1970, and 1971 and younger. All the four probability distributions show zero chance of childbearing below 15 or above 49, and bell-shaped probability curves between 15 and 49 with peaks around 22–24.

Step 4:

Starting from the population structure in 1970, we first derive the population size by gender and age in 1971, assuming that a part of the population die between 1970 and 1971 following the mortality rates in Table 8. Particularly, the people aged 99 in 1970 are completely removed in 1971, so that the upper bound of age in 1971 remains 99. Then, we calculate the number of newborn boys and girls in 1971, based on the number of women in 1971, the number of births of each woman in 1971, and the sex ratio at birth. Similarly, we simulate the population size by gender and age in a year based on the population structure in the previous year, and finally, we create the population pyramids in 1990, 2000, and 2010 in Fig. 3.

Predict the population structure in 2015 based on the population structure in the 2010 population census, using the actual fertility rates and the same procedure described in Section 2 of this appendix.

Step 2:

Assume the lifetime number of births is added by 0.3, 0.5, or 0.7. With the new fertility rates and the same procedure as in Section 2 of this appendix, we start from the population structure of 2015 and derive the population size and the elderly dependency ratio every 5 years until 2050.

All steps are the same with Section 3 of this appendix, except that women’s lifetime births are assumed to increase by 1.

Appendix 4: A conceptual model of migration

Suppose there are two cities in the economy: A and B. Each city has a representative firm producing a homogeneous good with the same production function g(zi, Li), i = A, B, where Li is the labor input in city i and zi incorporates all technologies that affect labor productivity in city i. Let \( \frac{\partial g\left({z}_i,{L}_i\right)}{\partial {z}_i}>0,\;\frac{\partial g\left({z}_i,{L}_i\right)}{\partial {L}_i}>0,\kern0.24em \frac{\partial^2g\left({z}_i,{L}_i\right)}{\partial^2{L}_i}<0 \). Assume that each worker offers one unit of labor, and therefore, Li also represents the working-age population in city i. The Li working-age people in the current period were born in the last period by the last-period working-age population, Li,− 1. For simplicity, we assume that (1) the Li population will not become labor forces until the current period, and (2) the Li,− 1 population completely exit the labor markets in the current period. In other words, in each period, only one generation of population serves as the labor forces. We assume Li = Li,− 1fi, where fi is the last-period fertility rates in city i.

Trade in products is costless, which equalizes prices across regions. We normalize the price of products to be 1. Firms maximize profits as price takers. Without migration between the two cities, the equilibrium real wage in city i satisfies \( {w}_i=\frac{\partial g\left({z}_i,{L}_i\right)}{\partial {L}_i} \). Assume that migration imposes a cost c > 0 on each migrant. There will be migration in the equilibrium if and only if \( \left|\frac{\partial g\left({z}_A,{L}_A\right)}{\partial {L}_A}-\frac{\partial g\left({z}_B,{L}_B\right)}{\partial {L}_B}\right|>c \). Under such a condition, the equilibrium real wages with migration satisfies |wAm − wBm| = c. Without loss of generality, we assume \( \frac{\partial g\left({z}_A,{L}_A\right)}{\partial {L}_A}-\frac{\partial g\left({z}_B,{L}_B\right)}{\partial {L}_B}>c \), and then people migrate from city B to city A. This condition implies that technologies are more advanced in city A or/and that the size of labor is smaller in city A.

which implies that, given other factors being constant, a negative fertility shock in city \( A \) increases the marginal product of labor in city A and thus induces a higher volume of migration flow from city B to city A.